How Many Sets Of Books Does A Business Need?

This is a question that I, as an accountant, find incredible when I am occasionally asked. Why would any busy business owner think there would be a need for more than one set of records? There is barely time to keep one set, let alone more. The only time I have found two serious sets of books was when fraud was involved and a grim determination by the businessman to pay as little tax as possible. No, he didn’t escape prison – 2 years in fact.

Sometimes the question is born out of a huge distrust of computers and computer based bookkeeping packages. There is more than a little reluctance to rely on the machine – just in case it breaks down, or accidentally wipes all data off it’s hard drive – so should we keep a hand written set of books “just in case?” The answer is no. Just make sure you have a disaster recovery procedure – and check your backups regularly just in case they cannot be restored when you really need them.

Sometimes the question is genuine as the questioner heard somewhere, usually the pub, that as VAT on some expenses cannot be reclaimed, that these need keeping in a different set of books. Likewise, entertaining and other expenses which are not tax deductible should be kept separately from other expenditure which is tax deductible. The answer again is no. One set of records is all that is needed and let your accountant worry about what is tax allowable and what isn’t when he prepares your annual accounts.

I advise anyone who asks this question to focus on keeping the most up to date, detailed books they can – just the one set! – or let someone like me deal with it for them for a monthly fee.

Please do not hesitate to contact me if you would like to know more about our bookkeeping bureau service.

I am a qualified Certified Practising Accountant having passed my final exams way back in 1981. I actually can’t believe that was 37 years ago!! Anyway, I am now in my 60’s and I have been running my own business since May 1983. And before you ask, no, I have never regretted a moment of it!
Part of the membership requirements of my professional body now dictate that I spend quite a lot of time on “CPD” - continuing professional education (one of their better ideas) - and over the last two years I decided to study business growth and marketing.
I have learnt such a lot and that knowledge has radically changed my old “accountants” approach to business. It has made such a difference to the way I work and operate I feel that I just have to pass on this knowledge. It is simply too powerful to hold back!! - but I will try and do it in simple terms rather than expecting you to spend hours, as I had to, working through the difficult language that trainers seem to use to pass on their concepts.
I hope you find the blog a useful resource and interesting place to visit as the months pass. I will do my best to keep up the flow - but if there are any topics you would like me to cover, then please let me know.
Ray Stewart